Monday, January 2, 2012

Know All about Google

All about Google

Everything you always wanted to know about Google…But were afraid to ask Paris, December 2008

This work is licensed under the Creative Commons to allow for further contributions by other specialists and web users in the coming months. To view a copy of this Attribution-NonCommercial- ShareAlike3.0 Unported license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/ or send a letter to Creative Commons, 1712nd Street, Suite300, San Francisco, California, 94105, USA. ..……. December 2008 • Everything you always wanted to know about Google… • 2

Google key success factors : Web specific ? Scalability Network effects Data mining • Ability to easily grow at • The utility of a good or a • The web offers the marginal costs service varies with the opportunity to exploit and • Applied to infrastructures : number of users analyze a very large ability to adapt its size to • The reach of a critical amount of data high load & volumes mass of users constitutes • Users’ behavior can be • Applied to business a significant barrier to the analyzed to create models : ability to entry monetizing value monetize millions of users Openness Cocreation Business model • The traditional walled • Non-traditional actors • Advertising is not a market garden1 media strategy become part of the value but a business model becomes irrelevant chain • Any market that attract • Content and services must • Users, content creators advertising is a target for be open and interoperable and external developers Google to favor audience are given the tools to circulation create new markets and enrich services ..……. 1 Network or portal which offers only its own content or services to users December 2008 • Everything you always wanted to know about Google… • 3

5 How Google wants to compete with Facebook ? In 2007, Google launched Opensocial : a series of multi platform API allowing developers to create compatible applications with partnering social networks, Ex : Slideshare application available on Linkedin and hi5 OpenSocial is not a Facebook competitor but a «meta-social network ». Network Network effects effects Network effects Google wants to become the « social data search engine » and to monetize this data, leveraging network effects. Facebook’s platform is limited, Google’s is the whole Web ..……. December 2008 • Everything you always wanted to know about Google… • 11

7 How does Google buy traffic ? Google asserts its ability to attract users on the sole basis of its services quality and without turning to advertising… Truth is Google largely buys traffic from providers Browsers Manufacturers Toolbar Portals •Firefox: 60 million daily • In 2006, partnership users in 2008 deal with Dell to have the • The Google Toolbar is part of the web navigator, •Google finances 85% of Google search engine which makes Google the • In 2005, Google bought Firefox in exchange for appear by default on Dell a 5% stake in AOL for 1 computers default search engine having its search engine billion$ (20 million embedded in the browser • In 2008, partnership • Adobe installs it as part subscribers at time of deal) of a package with deal with Apple to have the • Google became AOL’s Google search engine Shockwave(2006) white label search engine appear by default on • Sun has been installing • Google expands its Iphones (13 million devices it as part of a package with advertising network reach sold by october 2008) Java since 2005 (20 million • Partnerships with uploads/month) manufacturers allow the search engine to be guaranteed to in a prime position. Google has the financial power to buy traffic from partners, accessing to massive audiences. ..……. December 2008 • Everything you always wanted to know about Google… • 14

Why doesn’t Google monetize all of its 9 services? Some Google services are free of charge and monetized through advertising : Blogger: blog creating tool Google Health: service for managing and storing personal medical information GoogleNews: personalized mash-up of news articles and summary Picasa: photo sharing service Google SketchUp: 3D model creating tool Goog-411: phone information service … These services are actually indirectly monetized : Tools designed to Products specifically Attract new customers generate audience are developed to improve through loss leaders made available other Google products Monetization of blogs created on Google 411 created to better the Picasa devised as a loss leader Blogger through AdSense or video indexing on YouTube towards other Google products FeedBurner Google global strategy allows strong indirect monetization of its products ..……. December 2008 • Everything you always wanted to know about Google… • 16

10 How does Google capitalize on Open Source developers work ? Google encourages development of open source applications: • Google code: platform designed for Open Source developers Supplied with guides, tutorials, code extracts of Google products • Google Search Code: code search engine Automatic referencing of all code sections that can be found on the Internet • Events created for the Open Source community: Google Summer of Code: grants awarded to Open Source student projects Google Developer Days: seminars dedicated to Google products Through support of Open Source community, Google pursues 4 objectives: Development of Open Increase of total Promotion of a more Assembling a free Source langages used Internet traffic « open » Web public relations team by Google •New applications •Increasing the •Developers’ chats are •The number of create new uses, interoperability a very effective public available Open Source leading to increased multiplies network relation tool codes encourages the total traffic effects1 emerging of new •Opensource is products becoming an •Feedback of Open advantage to attack Source developers proprietary code helps creating new strategies products Google supports the Open Source community in a spirit of collaborative creation, one of Google’s strategic pillars ..……. 1 See Annex December 2008 • Everything you always wanted to know about Google… • 17

12 Why is Google stealing our voices? In 2007, Google launched Google Voice Local Search in the United States, a free and automated phone directory service : What is the business model of this free and ad-free service ? Google is creating a database of phonemes, recorded during calls in order to better its speech to text1 technologies: Creation of a Development Indexing of Indexing of all of « speech to phoneme text » YouTube audio/voice database audio tracks sources technologies 2 Bla bla bla Externalizing tasks onto users (« crowdsourcing 3») is a commonly used process by Google to improve its products. 1 Converting oral information into text 2 First experiments with political videos posted during the presidential campaign of 2008. 3 Neologism created in 2006 by Jeff Howe and Mark Robinson, Wired magazine editors ..……. December 2008 • Everything you always wanted to know about Google… • 19

13 Is PageRank a really competitive advantage ? (1/2) PageRank is Google’s link analysis algorithm that measures the probability that a page will be relevant to user’s query : Based on the correlation between the amount of links towards a page and their relevance It accounts for the notoriety of the sites that link to the page in question PageRank’s simplified formula is : (A page’s (u) PR is the sum of all PRs of pages linking to u (v), divided by the respective number of outbound links contained in pages v) Google1 claims that PageRank is one of its search engine’s main competitive advantage : A « champion of The search engine’s A tool unlikely to be democracy » « cornerstone » tampered with 1 http://www.google.fr/why_use.html ..……. December 2008 • Everything you always wanted to know about Google… • 20

13 Is PageRank a really competitive advantage ? (2/2) A tool that can’t be tampered with? An outdated technology? Sale or exchange of famous website links Launch of search engines that (webringing) don’t use tools such as Search Engine Optimization1 techniques PageRank (Cuil, Powerset) Google’s search engine success relies on other factors : Relevance guaranteed Scalable architecture Quick/simple queries by 200 other criteria • Capacity of increasing/ • Clear query interface • The search engine’s growing according to the • Simple and quick algorithm was subjected to volume of indexed pages presentation of results 450 modifications in 2007 and number of queries • 2 millions servers by 2008 PageRank is only one of many Google’s search competitive advantages. It is certainly not the main entry barrier to competitors on the search market. 1 Set of techniques aiming at improving a site’s referencing on a search engine. ..……. December 2008 • Everything you always wanted to know about Google… • 21

14 How does Google turn advertising into information and performance?(2/2) Displays advertising defines Relevance Quality Score Performance For the user Direct impact on advertising value For the advertiser Most relevant ad Qualityscore measures the relevance of the ad and is determined by the click throug rate on the ad. It impacts the display rank and Cost per Click: • Rank: relevant ads are pushed up, non relevant ads do not appear • Cost per click of the ad : performant Total cost of the advertising ads are charged less campaign is determined by the number of clicks on the ads and Less relevant ad not by the number of displays. Google’s advertising model benefits the user (improved relevance) as well as the publisher (performance based billing & rebates) ..……. December 2008 • Everything you always wanted to know about Google… • 23

What is a network effect? • A network effect describes how a service becomes more valuable to its users as more people use that same service Phone’s utility is limited if The utility for a user According to Metcalfe’s the network is composed raises if the network law, the utility(U) of a of 2 users broadens network is proportional to the square of the number (n) of its users U ≈ k*n2 Network effects creates critical masses of users. They represent significant barriers to entry for competitors. ..……. December 2008 • Everything you always wanted to know about Google… • 27

What is a two-sided market? • A two sided market consists of a platform allowing 2 groups of clients/providers to interact and which optimizes the revenue distribution among these groups with the objective of maximizing market sizes. Exemple of the video game market Crossed network effects Internal Price A Price B network Side A Side B effects Developers Consumers Network effects in action Internal effects Crossed effects • A potential market for a • Utility to a new developer developer gets bigger as more increases as the community of consumers enter the said market developers grows (shared knowledge) • The number of games available to the consumer increases with • Utility to a new consumer the number of developers increases as the community of working on the platform consumers grows (secondhand market) ..……. December 2008 • Everything you always wanted to know about Google… • 28

Pricing of a two-sided market Price A > 0 Price A < 0 Side A Platform1 Face A Platform1 • The platform may charge a side • … or subsidize a side • Example 1 : Apple Appstore charges • Example 3 : Google Android finances developers by taking a revenue share developers through a contest on sold applications • Example 4 : Youtube finances video • Example 2 : Microsoft makes content providers consumers pay for video games Who should you be charging? Who should be subsidized? The platform must subsidize the groupe that is most price-sensitive and charge the group that is most sensitive to the other group’s size. 1 Provided the sum of price A + price B is a fixed figure, a platform financing a group automatically charges the other group and vice versa ..……. December 2008 • Everything you always wanted to know about Google… • 29